During turbulent times in the stock market, investors start searching for relatively safe places to invest. Money flows out of high-risk growth stocks and into stocks with reasonable valuations, solid cash flow and reliable dividends. Early forecasts for 2019 predict another range-bound year for stocks, suggesting dividends may be one of the only guaranteed sources of market returns. Companies with relatively low payout ratios, the percentage of earnings committed to dividend payments, are the safest dividend stocks to buy in the current environment. Here’s a look at nine safe dividend stocks CFRA says are smart long-term investments headed into 2019.
Broadcom (ticker: AVGO)
Apple (AAPL) iPhone chip supplier Broadcom has had a bumpy road in 2018. A proposed buyout of Qualcomm (QCOM) was blocked by the U.S. government due to national security concerns, and iPhone unit growth is showing signs of peaking. However, analyst Angelo Zino says Broadcom’s cash flow gives the company financial flexibility, and operating margins should expand from 50 to 55 percent by fiscal 2020. Broadcom has a 3 percent dividend yield and a 23.1 percent payout ratio. CFRA has a “strong buy” rating and $282 price target for AVGO stock.
Bank of New York Mellon Corp. (BK)
Bank of New York Mellon is a U.S. bank with more than $34.5 trillion in assets under custody. Analyst Cathy Seifert says an environment of modestly rising interest rates will continue to improve margins and earnings. She says an increasingly complicated regulatory landscape is also driving customers away from smaller asset managers and toward larger operations like Bank of New York Mellon. Bank of New York Mellon has a 2.3 percent dividend yield and a 23.3 percent payout ratio. CFRA has a “strong buy” rating and $60 price target for BK stock.
Comerica Incorporated (CMA)
Comerica is a U.S. financial services company with $72 billion in assets. Analyst Harrison Webster says Comerica’s 53 percent ratio of noninterest-bearing deposits to total deposits is highest among its peer group and is an indication that CMA’s margins are stable and relatively insulated from fluctuations in interest rates. In the most recent quarter, net interest margin expanded 0.32 percent to a solid 3.6 percent. Comerica has a 3.3 percent dividend yield and a 25.8 percent payout ratio. CFRA has a “strong buy” rating and $109 price target for CMA stock.
CVS Health Corp. (CVS)
After more than five years of underperformance, CVS may finally be positioned to be a market leader. CVS recently closed its massive $69 billion merger with health insurance giant Aetna, and analyst Kevin Huang says the company is prepared to create a brand new health care model centered on its CVS Minute Clinics. Huang says CVS will likely incentivize Aetna’s 22 million health plan customers to use CVS’s services as well. CVS has a 2.7 percent dividend and a 66 percent payout ratio. CFRA has a “strong buy” rating and $95 price target for CVS stock.
Delta Air Lines (DAL)
Long-time investors know airlines have historically been extremely cyclical companies and not the type of stocks to be buying during periods of economic uncertainty. However, analyst Jim Corridore says Delta Air Lines is not your typical airline. Corridore says the company has much stronger free cash flow than its peer group, and management has committed to returning 70 percent of that cash flow to shareholders via buybacks and dividends. Delta has a 2.5 percent dividend yield and a 24.8 percent payout ratio. CFRA has…
Click here to continue reading
Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!
